At this month’s Medical Group Management Association (MGMA) meeting for the Eastern
Oklahoma Chapter, I learned about fraud that takes place in the work place. The
presenter was Brett A. Johnson CPA/CFF.CFE, CFI with Eide Bailly who has over eight
years’ experience in the field of forensic accounting, fraud detection and fraud
prevention consulting. His presentation focused on the Who, Where and Why employees
commit fraud. When identifying why fraud happens he said that according to the
ACFE 2012 Report to the Nation that the number one reason for fraud is poor, circumvented
or non-existent internal controls. He further went on to say that a common example
seen of this was the lack of separation of duties. One such example that Brett
shared was when the managing doctor of a physician practice “stumbled” across the
fraud which implicated his accounting manager. It included diverted insurance payments,
taking cash and misusing credit cards. And yes, she handled all of the accounting
duties. The problem, as Brett mentions above, was that there was only one “set
of hands” involved in managing revenue which provided opportunity. In another example
for a medical distributor, the warehouse manager was selling inventory on eBay
and pocketing the money. Once again, there were no controls in place such as separation
of duties or systems in place like a warehouse management solution. My take away from the presentation was that when a business has processes or disparate systems that lack visibility there is opportunity for fraud. Meaning that, if you want to prevent fraud you have to be proactive. He
went on to mention that it’s a good idea to always make sure that two sets of “eyes”
are involved in all processes regarding money, think about conducting “surprise”
audits throughout the fiscal year and make sure you have surveillance systems in
place to protect inventory from “shrinkage”. My additional suggestion would be to invest in technology and accounting software that automates the manual and provides visibility through reporting and dash boarding. Accounting software implemented correctly can eliminate possible “silos” where fraud could occur and give immediate access to information that allows management to see the performance of the business and track “trends” that might be associated with fraud. Being
proactive and investing in ways to eliminate fraud is worth it. Just a few numbers
to leave with you about the costs of fraud as published in the ACFE 2012 Report
to the Nation. •Median Asset Theft $120,000 •Median Corruption $250,000 •Median
Fraudulent Statements $1,000,000 •Median Loss in the Healthcare Industry $200,000

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